WEEKLY OUTLOOK FOR FX MAJORS (24–28 APRIL)

FUTURE EVENTS:

· US CB Consumer Confidence on Tuesday.

· Wednesday: CPI for Australia.

· US Jobless Claims and US GDP on Thursday.

· BoJ Policy Decision, US PCE, and US ECI on Friday.

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Tuesday: A little decline in the Conference Board Consumer Confidence survey from the previous reading of 104.2 to 104.0 is anticipated. The existing situation index and the prognosis on the labor market will, in my opinion, be the most significant readings in this case. The current situation index may serve as a labor market leading indicator. with the banking problems in mid-March, it got a little worse last month, so it will be fascinating to see how it did with another month of data.

Wednesday: The Trimmed Mean CPI Y/Y, the RBA's preferred inflation indicator, is predicted to be 6.7% vs. 6.9% before. Given that the RBA stopped the tightening cycle at 3.60% and since inflation is still high and the labor market appears to be in good shape, it will be interesting to see how things turn out for them.

Thursday: The US GDP is projected to increase by 2.0% Q/Q in Q1 compared to Q1's 2.6%. I don't think the market will pay this one much consideration as a lagging indicator.

The US Jobless Claims, like they have been for the past few weeks, will be one of the most important data points this week. The predicted total for initial claims is 250K, up from the previous level of 245K, while the projected total for continuing claims is 1865K.

I think that the market is currently focusing more on the labor situation, even though inflation is undeniably still high. With a higher unemployment rate and a positive real Fed Funds Rate, inflation should return to target. Of course, this hinges on the Fed's will to keep interest rates high despite an eventual rise in the jobless rate.

Friday: The BoJ is anticipated to maintain its current monetary policy with rates at -0.10% and QQE with YCC to flexibly target 10yr JGB yields at 0% within a tolerance band of +/- 50 bps. Although the JPY is anticipated to depreciate if the BoJ sticks with its current course of action, I anticipate the currency to strengthen as the global recession draws closer.

The Fed's preferred gauge of inflation, the US Core PCE Y/Y, is anticipated to edge down to 4.5% from 4.6% in the prior period, while the M/M reading is projected to stay the same at 0.3%. The FFR will finally be raised above the inflation rate, which is the most restrictive level, when the Fed announces a further 25 bps hike the following week. The next struggle for them should be to maintain high rates despite falling inflation and rising unemployment until there is undeniable proof that inflation is returning to the target range.

The Fed is concentrating on the Employment Cost Index because it was concerned about a wage price spiral that never materialized, even though the Atlanta Fed's Wage Growth Tracker recently increased. The ECI is predicted to increase from 1.0% to 1.1% Q/Q.